The brake pads being loose in the caliper would cause a rattle or a slapping noise while the brakes are not engaged and would stop when the brakes are engaged. The brake pads should slide freely into the caliper bracket but should not move up and down in the bracket.
With the mileage on your vehicle there is a strong possibility that the movement of the brake pads may have worn the caliper bracket where the pads ride, allowing the pads to slap when there is no brake pressure. The backing to the pads may also be slightly smaller due to differences in manufacturer designs.
If this is the cause of the slapping noise as long as the brake pads move properly in the caliper bracket the noise, although annoying, is not a safety issue. You could try disesembling the brakes and coating the back of the brake pads and the channels in the caliper bracket with a high temp, synthetic caliper grease. Also be sure to check the bolts to the caliper bracket, the caliper bolts, and the lug nuts to be sure they are tightend propperly.
One other thing that can cause a simmilar noise, a rattle-slap-squeek noise, is the wheel covers. There is a technical service bulletin from GM about this and they have available a bushing kit that are put on the wheel covers to help deaden the noise.
These are just a few ideas, let me know if they are any help.
Thursday, October 7th, 2010 AT 1:37 PM